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NEW YORK — Stocks gave up a healthy advance and closed slightly lower Tuesday as investors suffered another bout of anxiety over President Barack Obama's plan to regulate banks.

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The Dow Jones industrial average, up 90 points in the early afternoon, closed with a loss of 2.57. The other major indexes were also down modestly.

Uneasiness about Obama's plan to limit the size and trading operations of big banks pulled financial stocks and then the entire market lower. News reports that Paul Volcker, the head of the President's Economic Recovery Advisory Board, would testify about the plan before Congress next week, contributed to the market's turnaround. The office of Sen. Christopher Dodd, D-Conn., said after the market closed that Volcker, a former Federal Reserve chairman, would appear before the Senate Banking Committee next Tuesday.

The drop was the market's fifth in seven days, and the fact that it came shortly before the closing bell showed how uneasy investors are; last-hour pullbacks were the hallmark of a troubled market during the financial crisis of 2008.

Obama's announcement of his plan last week helped give stocks their worst week in 10 months. Traders said some investors had started to regard the proposals as political bluster before the latest reports dashed those hopes.

"There is maybe more than just a bark. Maybe this thing does have a bite," said Dan Deming, a trader with Stutland Equities in Chicago.

Even banks seen as strong like Goldman Sachs Group Inc. and JPMorgan Chase & Co. fell sharply.

The market had climbed most of the day on upbeat economic and corporate earnings news. The Conference Board said its index of consumer confidence rose to 55.9 in January from 53.6 in December. It was the third straight increase and the highest level in more than a year.

And insurer Travelers Cos. said an absence of catastrophe costs and a recovery in its investment portfolios lifted profits 60 percent for the final three months of 2009.

The Dow fell 2.57, or less than 0.1 percent, to 10,194.29. The Standard & Poor's 500 index slid 4.61, or 0.4 percent, to 1,092.17. The Nasdaq composite index dropped 7.07, or 0.3 percent, to 2,203.73.

Two stocks fell for every one that rose on the New York Stock Exchange. Consolidated volume rose to 4.8 billion shares from 4.5 billion shares Monday.

The day began with a bout of selling as China moved ahead with a plan to curb bank lending. Investors in the U.S. and elsewhere are concerned a slowdown in China's big economy could destabilize a worldwide recovery.

The drop Tuesday came as Federal Reserve policymakers began a two-day meeting on interest rate policy. The central bank is expected to keep rates at record lows, though investors will be looking at the Fed's assessment of the economy in a statement that will follow the meeting on Wednesday.

Stocks broke a three-day slide Monday as Fed Chairman Ben Bernanke's prospects for confirmation to another four-year term brightened. His term ends Sunday. Doubts last week about his ability to get confirmed in the Senate, combined with the White House's latest drive to clamp down on U.S. banks, led to the big drop in the market from Wednesday through Friday.

Christian Bendixen, director of technical research at Bay Crest Partners LLC in New York, said a drop in Goldman Sachs shares and increased trading volume underscores the market's nervousness about how increased regulation could big banks to rewrite their business models.

"Goldman Sachs is really breaking down and volume is really picking up. I think it really legitimizes those concerns," he said. "The perception has changed."

Goldman fell $4.10, or 2.7 percent, to $150.88, while JPMorgan lost 77 cents, or 2 percent, to $38.44.

Bendixen predicts that the flurry of events in Washington this week from the Fed's rate announcement to Obama's first State of the Union address on Wednesday will bring more fractiousness to the markets.

The dollar rose against other major currencies Tuesday, while gold advanced.

Crude oil fell 55 cents to $74.71 per barrel on the New York Mercantile Exchange.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.63 percent from late Monday.

Travelers rose $1.34, or 2.7 percent, to $50.23 after its report. It was the biggest gainer among the 30 stocks that make up the Dow industrials.

Apple Inc. rose $3.07, or 1.5 percent, to $205.94 after posting a profit increase late Monday.

While investors were rewarding individual companies for upbeat reports, they also punished those that disappointed the market. Verizon Communications Inc., another Dow company, fell 51 cents to $30.17 after losing money in the fourth quarter.